Business / Economy

Japan's industrial output rises 1.5% in November

Kyodo

Japan’s industrial output rose 1.5 percent in November from the previous month, boosted by growth in electronics and automotive parts, the government said Wednesday, upgrading its assessment for the first time since August.

The Ministry of Economy, Trade and Industry said industrial production shows signs of increasing.

The assessment was last used in March 2014 before Japan raised its consumption tax from 5 percent to the current 8 percent, which later weighed on consumer sentiment.

A ministry official said the latest upgrade comes as the production index has not fallen for the past four months. “We see strength in a range of sectors in both production and shipments,” the official told a news briefing.

The index of output at factories and mines stood at 99.9 against the base of 100 in 2010, the ministry said in a preliminary report.

In the survey, 11 out of 15 sectors reported production growth while the number rose to 13 in shipments.

General-purpose, production and business-oriented machinery was the largest contributor to the industrial output index in November, with a 3.3 percent rise. Transport, including the auto sector, gained 2.0 percent.

A pickup in exports and domestic demand is expected to support industrial production, although uncertainty remains over the details of U.S. economic policy once U.S. President-elect Donald Trump takes office, economists said.

The yen’s recent weakness against the dollar will likely boost the earnings of Japanese exporters, bringing into focus how much companies will increase production and investment.

“I expect growth in the auto, electronics, and other general purpose machinery sectors to continue, given that manufacturers are upbeat on production plans,” said Junichi Makino, chief economist at SMBC Nikko Securities Inc.

“But we need to be careful about the pace of growth because upward momentum tends to take a respite after gaining rapidly,” Makino added.

Manufacturers polled by the ministry said they expect output to rise 2.0 percent in December and then 2.2 percent in January.

The index of industrial shipments increased 0.9 percent to 99.2, while that of inventories fell 1.5 percent to 107.0.

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